ᐅ How can we widen our niche? By sanding the plaster?

Applying plaster,
using hammer and chisel and blue thumb (half a day),
or with a small rotary hammer (20 minutes)

If it is not "too bothersome" that the furniture protrudes, I would consider covering the gap at the back with a well-fitted board (either matching wood or painted white). Once the plaster and wallpaper are removed, this will definitely remain visible along the upper rear edge... (regardless of how much or little dust is generated) Therefore, this area will need to be "addressed" somehow (for example, a white quarter round molding in the corner).

One question is whether it might be simpler to modify the furniture. Perhaps a side panel can be removed, the whole piece shortened, and then reassembled? There is already a seam. Maybe the wall where two parts meet could be completely omitted?

Would it be worth consulting a carpenter?

I know of situations where, due to a mistake, the final result was better than originally planned (maybe you will be happy with a larger table surface because something fits now that didn’t before).

I would pragmatically and quickly tackle the plaster with a multitool and accept that the wall behind the furniture may no longer look perfect. This creates less mess and requires less effort than sanding, while offering more precision than chiseling.

If we are really talking about 5 mm (0.5 centimeters), then use a sanding block and sandpaper and carefully sand it down by hand.
5 mm is almost just wallpaper and paint.

I just went through the same issue myself. Mark the edge of the wood on the wall with a pencil, then carefully score along the edge with a utility knife, and cut more deeply just below that. Anything under the edge won’t be visible. Sanding always creates dust, so cutting and chiseling works better. If necessary, run the vacuum briefly, but if you work slowly, not much dust will be produced. Since it’s probably gypsum plaster, you can also score it all with the knife and then gently chip it away with a putty knife and hammer.

If it’s just a rear corner, I would plane the piece of furniture at the corner. For a recess in a house, I wouldn’t tackle it at all, both for aesthetic and practical reasons.